Canadian cannabis producer The Green Organic Dutchman Holdings Ltd. (CSE: TGOD) (US-OTC: TGODF) is set to acquire the organic cannabis producer BZAM Holdings.
On Wednesday, the companies announced the deal where the BZAM shareholders will hold approximately 49.5 per cent of the issued and outstanding combined entity shares.
According to HyFire and Weed Crawler, the merger deal will create the sixth-largest Canadian cannabis company based on June-August 2022 retail sales.
The combined entity is projected to reach a net revenue of at least $100 million for 2023 and the addition of BZAM materially strengthens TGOD’s financial position. In 2021, TGOD make $31.6 million in net revenue from January-September 2022 while BZAM made $32.7 million.
Together, they generated $85.7 million pro forma unaudited net revenue for the 12 months ending in September this year. BZAM’s Pitt Meadows facility in British Columbia will be used for TGOD’s products and take advantage of its low-cost THC distillate and extraction capacities.
BZAM shareholders will also earn up to $33 million in combined entity shares depending on certain milestones such as annual net revenue targets and positive adjusted EBITDA targets for 2023. The transaction is scheduled to close in early November.
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After the merge, the combined firm will be led by BZAM’s current CEO Matt Milich, and CCO Jordan Winnett along with TGOD’s current CEO and Interim CFO Sean Bovingdon, who will take the role of CFO, in order to assist with the integration of BZAM and TGOD.
“This is an exciting day for both companies, for our employees, and for our consumers. We are bringing together two rapidly growing companies that share a passion for cultivation, innovation and brand development,” Bovingdon said.
“Our highly complementary businesses in terms of production footprints, products and distribution networks create a combined entity with a leading branded product portfolio along with significant synergies across our operations.”
TGOD sells organic flower and hash under its TGOD and Highly Dutch brands which are popular in Quebec and Ontario.
Millich said the company is looking forward to bringing together TGOD’s organic flower and hash with its “crowd-pleasing” vapes and its flower.
“Together, we expect to expand on what we have each accomplished so far, as we build a strong, EBITDA-positive cannabis company,” Millich added.
BZAM sells vapes, infused pre-rolls and high-quality flower under the brands -ness, Table Top, Dunn Cannabis and FRESH which have a strong market presence in Alberta and B.C.